El Niño Helped Reduce Natural Catastrophe Losses in 2015: Munich Re

  • Date: 04/01/16
  • Business Wire

Industry-wide losses from natural catastrophes in 2015 were lower than the previous year, due in part to El Niño climate conditions in the Pacific ocean which reduced hurricane activity in the North Atlantic.

US Nat Cat Loss Events 2015 (Graphic: Business Wire)

The costliest global natural catastrophe for the insurance industry was the series of winter storms that struck the northeast United States and Canada.

In the US, 2015 estimated natural catastrophe losses totalled US$ 25bn (previous year US$ 28bn), of which roughly US$ 15bn (previous year US$ 17bn) was insured. 2015 estimates exclude loss events that occurred during the last week of December (which are still being assessed).

“In terms of financial losses, the industry was somewhat fortunate in 2015,” said Tony Kuczinski, President and CEO, Munich Reinsurance America, Inc. “However, the comparatively low losses are no reason for complacency. Near misses and time between significant events tend to decrease perception of risk. We must continue to focus on creating resiliency and saving lives through stronger building codes, better land use and protective infrastructure.”

Natural catastrophes claimed 280 lives in the US in 2015 (previous year 270), below the annual average for the last 30 years (580).

Peter Hoeppe, Head of Munich Re’s Geo Risks Research Unit said, “In 2015, strong tropical cyclones primarily hit sparsely populated areas or did not make landfall at all. In the North Atlantic, wind shear from the El Niño event helped to curtail the development of tropical cyclones, while measures to reduce loss susceptibility may have also had a positive effect. However, scientists believe that in the coming year the strong El Niño phase might be followed by a La Niña event. Both versions of the climate oscillation ENSO (El Niño Southern Oscillation) in the Pacific, influence weather extremes throughout the world. A La Niña phase would promote the development of hurricanes in the North Atlantic, for example.”

The costliest natural catastrophe for the insurance industry in 2015 was a series of winter storms that struck the northeast United States and Canada. Insured losses came to US$ 2.1bn; overall losses were US$ 2.8bn. As in 2014, the winter of 2015 was unusually cold and snowy in the northeast US. In Boston, a record 90-inches of snow fell over a three week period, resulting in extraordinary snow loads that damaged thousands of buildings.

“North America is hit by dozens of winter storms annually, which cause a variety of hazards such as snow and sleet,” said Mark Bove, Senior Research Meteorologist, Munich Reinsurance America, Inc. “But despite the frequency and size of winter storms, they do not usually have the same loss potential as tropical cyclones or earthquakes. Nevertheless, a large number of winter storms in rapid succession can lead to significant aggregate losses.” […]

2015 Global Natural Catastrophes

Worldwide, 94% of loss-relevant natural catastrophes in 2015 were weather-related events. Particularly evident was the influence of ENSO in the equatorial Pacific. Due to the strong El Niño phase, the number of 11 tropical cyclones in the North Atlantic was below the basin average since 1995 (14.8). Of these cyclones, only four reached hurricane strength (average 7.6). Overall losses and insured losses came to just a fraction of the averages for previous years.

On the other hand, El Niño promoted the development of intense tropical cyclones in the northeast Pacific, partly due to the higher water temperatures it brings. A total of 26 cyclones (long-term average 15.6) developed there, 16 of which reached hurricane strength. Eleven (long-term average 4.1) grew to major hurricanes.

Although most storms in the northeast Pacific do not make landfall, one storm in 2015 did, and was particularly noteworthy: Hurricane Patricia became one of the strongest tropical cyclones on record globally and the most powerful in the northeast Pacific to make landfall. With sustained wind speeds of up to 200 mph, Patricia came ashore in late October close to Cuixmala in the Mexican state of Jalisco. Fortunately, this region contains the Chamela-Cuixmala Biosphere Reserve and is therefore sparsely populated. The storm was also relatively small in size and did not cause the level of damage that many less powerful but larger storms usually do.

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